Thursday, August 29, 2013

Why My Etsy Shop is (Probably) Never Going to Open

I love sewing. Love it. There's something so satisfying about making an item with your hands. I made skirts, tops, purses, pajamas for the kids, shorts for my husband...the list goes on. And then I sewed my very first apron. And then another. And another. Something about aprons really touched me and aprons remain my most frequently sewn item. Over time I developed my own patterns and styles, received many compliments, and some people asked if I'd make them one, too. Usually I said no, as I didn't have the time. When my youngest started school, though, I realized I would have a little time. Not tons, you understand, as I still have to do dishes, laundry, clean the bathrooms and floors, do the baking, etc., but a little extra time. I decided to open an Etsy shop.

I wanted to do everything perfectly legally. I researched and read and studied over the course of a few months how I would file my federal tax and how to remit sales tax. I researched and analyzed shipping options. I spoke with other Etsy sellers when I had questions.

And then it happened. While reading over a document about business practices, I saw a sentence that read something like, "Make sure you have your city and county licenses." Wait. My what-what? It was the first time I was running across any such mention, although in hindsight of course you need a license to run a business. I figured that since my shop was more like a hobby with small profit or "hobby business," such an edict wouldn't apply to me. Still, I wanted to be thorough and make sure everything I was doing was on the up-and-up, so I set off to research it. I was going to do this right.

I read the county requirements (which do list "arts and crafts" as an occupation needing a license), and read the city requirements (which lists home based businesses as needing a license). By what I was seeing, it looked like I would be required to have both licenses. I still didn't want to believe it, especially after seeing the annual cost involved and the many hoops you had to jump through to get them. Surely, this wasn't meant to apply to me, as a hobby business?

I really felt, deep down, these regulations weren't intended for people like me and I'd be OK without one. But what if I was wrong? The penalty for guessing the wrong way was a pretty hefty fine and jail time. Not worth the gamble. I decided I would call the city license office and get a firm answer.

I got that solid answer. It was not the answer I wanted.

I explained to the office what I intended on doing and asked if I needed the license. In a nutshell, their answer was that if you make any money from this, then you need a license. Period. Notice I didn't say net profit. I just said money.

"Even though the licenses cost more than any profit I would make?" I asked.

The woman on the phone sighed. "Here's the thing," she said. "There is no dollar threshold to cross. If you make any money at all, you need a license."

She went into a speech about how to obtain these licenses and what forms to file to who and where, then how to contact the county and get that license, so on and so forth. Honestly, I wasn't listening. My eyes had gone very teary and I was ready to be done with this conversation. I let her finish, thanked her and explained that I wouldn't be opening after all.

I sat there with the horrible realization of what this meant. To proceed legally, I would be paying my city and county for the privilege of losing money. The licenses cost more than any profit I would make unless I was sewing for a straight 8 hours a day, and even then there was no guarantee I would make any money. I saw all the work, effort and research just slip away. There were exceptions to the business license rule, but none of them involved a dollar amount made or whether it was more of a hobby. So, I could pay to be able to lose money, or I could give up right then. Unfortunately, giving up was the only feasible option. At least, I told myself, all I've lost is time. I had put no money into it yet. The shop hadn't opened and I hadn't bought any materials for it.

The upside? I'll be posting tutorials, recipes, and other great things. No, I won't be selling my creations, but I can teach you how to make them. That's kind of awesome, don't ya think?